Product liability: the devil is in the detail
First it was the Fords Kugas that spontaneously combusted, now it is Enterprise meat products and Rainbow Chicken which have faced major product recalls. All of this happened within the last two years.
While the situation is very sensitive, it is far from over. We therefore need to take a step back and see how liability products assist in these situations.
Warning shots
In a widely publicised statement on 4 March, Minister of Health – Dr Aaron Motsoaledi – said that specific Enterprise meat products were the source of the outbreak of the Listeriosis disease which has killed over 180 people in the country.
How far reaching is the Enterprise product recall? Every major retailer has pulled Enterprise and Rainbow Chicken products from their shelves. These retailers have also pulled other brands of cold meat products off the shelves as a precaution in case there was cross any contamination.
Woolworths, Pick n Pay and Shoprite where among the most affected supermarkets. Woolworths said that it pulled 25 items off the shelf and has advised the public to bring these products back to the store for a full refund.
Broken trust
Tiger Brands is the holding company of Enterprise. In response to the allegations made by the Department of Health, Tiger Brands CEO Lawrence MacDougall held a press conference where he said that Tiger Brands would not take responsibility for the deaths caused by Listeriosis as there is no way that you link the company to the deaths.
"We have brought in independent experts to work with us and provide scientific expertise required to get to the bottom of this," said MacDougall.
MacDougall said that the company will only apologise for the deaths once independent scientists prove that Enterprise was negligent and was the cause of the deaths.
“Enterprise Foods follow a stringent protocol for the manufacturing of quality food products,” said MacDougall.
The key question to ask here is if the damage has already been done?
At the height of the Ford Kuga situation in 2016, Ford only managed to sell 74 Kugas in January 2017 after the company’s recall in December 2016. Before the recall, the company sold 146 vehicles in December 2016.
There have already been reports of consumers losing their trust in Enterprise, and the future doesn’t look bright as this can only get worse as the situation unfolds.
Necessary protection
Both the Ford and the Enterprise situation highlights the need for necessary liability cover when it comes to selling products to the public; especially if you are a large company and they are producing products for public consumption. FAnews approached a number of liability companies to get their comment on the Enterprise matter and none of them were willing to provide any comment.
Product liability is defined as an injury or damage arising out of the harmful nature of the insured’s products or out of the insured’s negligence while working on a product. There is an extension to this cover called product inefficacy which covers the financial losses caused to others because the insured’s product failed to perform properly. There is also professional indemnity cover which covers the company against pure economic loss where the claimant are customers.
There are a lot of extensions when it comes to a product recall situation. Extensive cover does not come standard and needs to be sold as extensions. We have not seen the end of the Enterprise situation, and it may turn into a perfect case study for brokers to discuss with clients.
Relevant Questions
As with most cases when it comes to product recall, there are a number of questions that remain unanswered.
Where is liability going to fall? Government has said that its scientists have said that the cause of the Listeriosis outbreak was Enterprise. Tiger Brands have said that they have employed the services of their own scientists to confirm whether government is right or not.
Once this has been established, where do we go from there? It is safe to say that the legal implications of this are possibly very far reaching. Will we see a massive class action in the future? It remains to be seen.
Editor’s Thoughts:
Companies need to protect their biggest asset, their ability to make profits, and our industry is the vanguard in this defence. Please comment below, interact with us on Twitter at @fanews_online or email me your thoughts [email protected].
Comments
My understanding of Professional Indemnity insurance is somewhat different to the explanation provided in the above article. PI insurance provides for financial losses for which they become legally liable following error, mistake, omission or negligence in their advice offered. Examples of business that will benefit from this insurance include estate agents, attorneys, accountants, and insurance brokers.
That said, I am a little surprised that there were no underwriters prepared to comment. This is an ideal case/scenario in which to educate us all (readers, relevant industries, etc.) regarding the benefits of being adequately insured. Report Abuse